Twice a Year Scientific Journal

124
Economic Analysis (2010, Vol. 43, No. 1-2, 117-125)
Chart 6. Market shares (credits) 4 Chart 7. Market shares (deposits) 4
The situation on credit market during the years 2004 and 2008 changed significantly. The
bank with leading role in 2004 dropped to second place in 2005 and since 2006 it declined to
third rung. The bank which won the leadership in 2005 remained at first place until 2007.
In the following year the difference between MS 1 and MS 2 was minimal and the leading
position was overtaken by the bank with the second largest market share of loans. These
findings correspond with the development of the recent years. Due to the high economic
growth we could observe easening of credit conditions and competitive fights between
commercial banks.
Analyzing the level of competition by using the market shares of 3 major banks brought
us, especially for the credit market, opposed conclusions as the analysis of market
concentration using the HHI index. While the HHI index (and also partly CR3 and CR5
index) informed us about the stagnation or increase of market concentration, market share
analysis demonstrated a highly competitive fight between commercial banks.
Conclusion
A general rule about countries with a small market is that they have a high degree of
concentration. In Slovakia, more than 50% of banking sector assets is held by the three largest
banks and approximately 70% is held by the five largest market players. Such a situation
refers to a higher concentration, but compared with other ʺnewʺ EU countries we belong
among the moderate above-average.
Analysis of the market share of three largest banks has shown us competition and a
decreasing position of the leading bank. On one hand, the situation in retail sector, where
there is a permanently higher level of concentration than in the corporate sector, is caused by
unconcerned consumers. On the other hand, the fact is that the three largest players on the
banking market are banks with the longest history. Two of them operate on the Slovak
market for more than 50 years and they inherited a number of clients from the previous
socialist era, when bank did not need to fight for a client.